Prioritization - Financial Advice

[FIRE-Rookie]

Hey amazing peeps,

I have some ideas going on the back of my mind and I figured some of you might help me reconcile them.

Here is my current situation:
1- Working full time in IT with modest salary.
2- Contributing to NISA and specific account in Rakuten.

Here is what I am trying to achieve:
1- Considering a top-school MBA within the next 3 years (Most likely full-time for 2 years outside of Japan & off-work as my profile won't fit into executive MBA)
2- Considering buying a house with my partner (No set deadline but the earlier the better and FIRE style: <25M & max of 15 years payment period) as paying rent is something that psychologically impacts us and we rather have roots.

The decision to go for MBA is heavily influenced by increasing my net worth and giving me mobility options as I have been pigeon-holed into IT sector by Japanese HR.

I don't have (and don't want) to pay any savings towards my projected student loan (potentially +$100k) so my initial thoughts is to work outside of Japan till this loan is fully paid or heavily reduced (2-3 years) then move back to Japan and resume life.

Reason for working abroad is there is a general sentiment (take this statement with a grain of salt) that MBA salaries in Japan are rather disappointing so it won't allow me to pay debt in a timely manner. My partner and myself are set on living in Japan for the long run.

Obviously, my current savings and my strategic movements for the next 2-3 years will highly determine my future setting.

I am planning on contributing to NISA no matter what during my MBA. I am planning to pay the minimum of 33,333 yen each month once I start the MBA program so my thoughts is to start saving an extra 33,333 yen in cash on monthly basis till that projected school start date and start contributing automatically while overseas.
Q:1- Is it possible to pay into NISA while studying overseas in another country? (Considering PR status)

The part that is really haunting me is whether we should abandon our house buying plans. Obviously the house will not be utilized for roughly ~4 years (2 years study program + ~2-3 years working to pay student-loan debt overseas) and considering our house budget then it will likely be a remote part of Tokyo that can't be easily rent while I am away. (Huge assumption!)

I know the next part will sound rather absurd but for my partner and myself, the house buying will ensure us that we have roots and that we will come back to Japan if life gets rough. While we can obviously delay the house buying plans till we come back to Japan but there is a bit of worry if we don't pull the trigger then we might never do. (e.g. Settle elsewhere around the globe) As I mentioned, I have a modest salary so contributing 80-90K monthly in mortgage while abroad will be rather challenging.
Q:2- Is it possible to pause mortgage or delay it somehow without exploding the interest rate?

I know the logic will say probably to hold the house buying and keep on rent but this is highly a psychological decision and it is a bit too much to have nobody else to exchange my financial thoughts with so I want to gain from your experience and hear some ideas as I think it will greatly help me come in peace with whatever decision I come up with in the future.

Thanks in advance!

[Kanto]

Hey amazing peeps,

I have some ideas going on the back of my mind and I figured some of you might help me reconcile them.

Here is my current situation:
1- Working full time in IT with modest salary.
2- Contributing to NISA and specific account in Rakuten.

Here is what I am trying to achieve:
1- Considering a top-school MBA within the next 3 years (Most likely full-time for 2 years outside of Japan & off-work as my profile won't fit into executive MBA)
2- Considering buying a house with my partner (No set deadline but the earlier the better and FIRE style: <25M & max of 15 years payment period) as paying rent is something that psychologically impacts us and we rather have roots.

The decision to go for MBA is heavily influenced by increasing my net worth and giving me mobility options as I have been pigeon-holed into IT sector by Japanese HR.

I don't have (and don't want) to pay any savings towards my projected student loan (potentially +$100k) so my initial thoughts is to work outside of Japan till this loan is fully paid or heavily reduced (2-3 years) then move back to Japan and resume life.

Reason for working abroad is there is a general sentiment (take this statement with a grain of salt) that MBA salaries in Japan are rather disappointing so it won't allow me to pay debt in a timely manner. My partner and myself are set on living in Japan for the long run.

Obviously, my current savings and my strategic movements for the next 2-3 years will highly determine my future setting.

I am planning on contributing to NISA no matter what during my MBA. I am planning to pay the minimum of 33,333 yen each month once I start the MBA program so my thoughts is to start saving an extra 33,333 yen in cash on monthly basis till that projected school start date and start contributing automatically while overseas.
Q:1- Is it possible to pay into NISA while studying overseas in another country? (Considering PR status)

The part that is really haunting me is whether we should abandon our house buying plans. Obviously the house will not be utilized for roughly ~4 years (2 years study program + ~2-3 years working to pay student-loan debt overseas) and considering our house budget then it will likely be a remote part of Tokyo that can't be easily rent while I am away. (Huge assumption!)

I know the next part will sound rather absurd but for my partner and myself, the house buying will ensure us that we have roots and that we will come back to Japan if life gets rough. While we can obviously delay the house buying plans till we come back to Japan but there is a bit of worry if we don't pull the trigger then we might never do. (e.g. Settle elsewhere around the globe) As I mentioned, I have a modest salary so contributing 80-90K monthly in mortgage while abroad will be rather challenging.
Q:2- Is it possible to pause mortgage or delay it somehow without exploding the interest rate?

I know the logic will say probably to hold the house buying and keep on rent but this is highly a psychological decision and it is a bit too much to have nobody else to exchange my financial thoughts with so I want to gain from your experience and hear some ideas as I think it will greatly help me come in peace with whatever decision I come up with in the future.

Thanks in advance!

1. Your Nisa is tied to your residential status. If that does not change, Rakuten or whathaveyou will continue to scoop the 33,333 yen out of your bank account on a monthly basis.

2. I do not think there is a penalty-free way to delay mortgage payments without showing extreme hardship of some sort, and even then the insurance would come into play.

-> Your plans of going $100,000 into debt do not match with your plans of wanting to buy a house. Why are you set on such an extremely expensive MBA program?

Why not take a more affordable local MBA? Waseda or even McGill? Stay in Japan.

[FIRE-Rookie]

1. Your Nisa is tied to your residential status. If that does not change, Rakuten or whathaveyou will continue to scoop the 33,333 yen out of your bank account on a monthly basis.

2. I do not think there is a penalty-free way to delay mortgage payments without showing extreme hardship of some sort, and even then the insurance would come into play.

-> Your plans of going $100,000 into debt do not match with your plans of wanting to buy a house. Why are you set on such an extremely expensive MBA program?

Why not take a more affordable local MBA? Waseda or even McGill? Stay in Japan.

Thank you for your replies as always, you are a living Encyclopedia!
It is comforting to know that NISA won't change.

As for the mortgage, I will try to look into ways for paying with the current savings or maybe having my partner's family contributing a bit. That is up in the air though!

As for your question, the answer is quite simple, the return of investment is quite low in Waseda's case. $54,280 Avg. Salary within 3 months of graduation. Unfortunately, MBAs are not highly regarded in Japan as it seems.
https://www.topmba.com/college/waseda-b ... tional-mba

Going to a top school MBA, something within the first 10-15 FT MBAs will somewhat ensure a pay scale of +$100K. Not to mention the network and shamefully the "prestige"!

[mighty58]

From what you wrote, you probably already know it deep down yourself, but the house plan doesn't really make sense. In addition to everything you mentioned (which I agree with), your motivations for getting the MBA ("giving me mobility options") and buying the house ("ensure us that we have roots") seem somewhat contradictory, or at best tenuous. At the salary levels and career path you are presumably going for, will a <25m house in a remote part of Tokyo really serve as the "anchor" that you think it will? If there's a great career move offered in another city 5-10 down the road paying 200K/yr, would owning this property actually affect that decision? Unlikely. And frankly, you can buy a <25m property in a remote part of Tokyo at any time in your life. Coming back to Japan is also a choice you can make at any time, and why you feel you need a liability on your books is strange to say the least.

As for the "value" of an MBA, I think the big factor in Waseda's post-graduation salary figures are not because of Waseda's educational quality per se, but is simply an indication that a lot of Waseda grads go on to work for Japanese companies. Japanese companies (at least pretty much all publicly traded companies) do not pay salary premiums for MBA holders, or if they do it's insignificant. As such, going to, say, McGill Japan and targeting a foreign-owned financial services or management consulting company will pay off far better (in terms of salary) than, say, getting a Harvard MBA and going on to work at a Japanese company.

[fools_gold]

As for your question, the answer is quite simple, the return of investment is quite low in Waseda's case. $54,280 Avg. Salary within 3 months of graduation. Unfortunately, MBAs are not highly regarded in Japan as it seems.
https://www.topmba.com/college/waseda-b ... tional-mba

Going to a top school MBA, something within the first 10-15 FT MBAs will somewhat ensure a pay scale of +$100K. Not to mention the network and shamefully the "prestige"!

Are you comparing like with like? I guess that the salaries quoted for graduates of prestigious US schools are US salaries, which are generally higher than Japan.

[adamu]

Remember that an MBA guarantees you'll pay the tuition fees, but it doesn't guarantee you a job. It's not a free pass - you still need to get the job yourself! So I guess it depends on your confidence that you can make it worthwhile.

I suppose that's the same for all non-compulsory education though. Takes time, effort and money to learn. Opens up potential, but provides no guarantees.

[DragonAsh]

One option, you could get a graduate degree in a variety of fields from Harvard almost entirely online.

https://www.extension.harvard.edu/acade ... te-degrees

[StockBeard]

For the NISA I think it's up to your financial institution. some of them might ask you to close (and cash out) the account when you leave, unless you can justify that this is temporary. (and typically, provide an address in Japan - e.g. family in law - where you can be reached).

For the home, as others have suggested, it doesn't make sense to buy a house now if your plan is to leave for 2 years in the foreseeable future. Go with your abroad MBA, then *if/when* you come back, you'll have time to buy a house.

On this specific point:

FIRE style: <25M & max of 15 years payment period)

I would say that a "FIRE" style of a house loan in Japan can be long rather than a short payment period. This dramatically lowers your monthly payment and you invest the difference, which is free money considering the interest rates for house loans in Japan.

[FIRE-Rookie]

From what you wrote, you probably already know it deep down yourself, but the house plan doesn't really make sense. In addition to everything you mentioned (which I agree with), your motivations for getting the MBA ("giving me mobility options") and buying the house ("ensure us that we have roots") seem somewhat contradictory, or at best tenuous. 

You know, I actually had to re-read it few times and was a bit astonished about the contradiction in my logic. Make no mistake, I am really grateful that you pointed out it like that. I really have to sit down and make some honest decisions about what I reallyneed to do! (Rather than "wants")

At the salary levels and career path you are presumably going for, will a <25m house in a remote part of Tokyo really serve as the "anchor" that you think it will? If there's a great career move offered in another city 5-10 down the road paying 200K/yr, would owning this property actually affect that decision? Unlikely. 

If I was ever presented with a chance with a significantly greater monetary compensation in Japan then I would probably shift things around. I guess my inclination to prefer a more comfortable, or financially lifestyle overweight the stability of the “roots”...Maybe I am saying this right now because I don’t have kids but who knows how that preference might change in the future. To be frank, it is hard to project (rather frustrating) how your preferences might change in the future so we (Partner and myself) are considering many options now so it wouldn't regret our decisions down the line.

And frankly, you can buy a <25m property in a remote part of Tokyo at any time in your life. Coming back to Japan is also a choice you can make at any time, and why you feel you need a liability on your books is strange to say the least.

To answer this, I will summarize by saying that I was recently involved in a car accident and if the angle of the impact was shifted by few degrees then I would have been paralyzed for life. Not to go into details, this experience showed me that a single event on any given day can put you in life-long disability so in my reasoning, the faster I pay this "projected debt" the less I have to worry about it much in the future.

As for the "value" of an MBA, I think the big factor in Waseda's post-graduation salary figures are not because of Waseda's educational quality per se, but is simply an indication that a lot of Waseda grads go on to work for Japanese companies. Japanese companies (at least pretty much all publicly traded companies) do not pay salary premiums for MBA holders, or if they do it's insignificant. As such, going to, say, McGill Japan and targeting a foreign-owned financial services or management consulting company will pay off far better (in terms of salary) than, say, getting a Harvard MBA and going on to work at a Japanese company.

I never considered this angle. Worth considering for sure and I have to be frank that I didn't do a proper research into the salaries of MBA grads in foreign companies. I am not sure where to look either but I guess I stalk some people of LinkedIn and ask for advice

[FIRE-Rookie]

Are you comparing like with like? I guess that the salaries quoted for graduates of prestigious US schools are US salaries, which are generally higher than Japan.

I will have to admit that my research was rather "simple" but then again if you have a source for MBA grads avg. salaries working in multinationals then I will be really grateful